Alkaben B. Patel vs. ITO (ITAT Ahmedabad) (Special Bench)
April, 08th 2014
The term “month” in s. 54E, 54EA, 54EB & 54EC does not mean “30 days” but the “calendar month”. So, the expression “within a month” means “before the end of the calendar month”
The assessee sold a flat on 10.06.2008. It made an investment in s. 54EC Bonds on 17.12.2008 and claimed an exemption from the capital gains. The AO held that the investment was not made “within a period of six months from the date of the transfer of the asset”. The assessee contended that the word “month” meant till the end of the month of December 2008. On this, the Special Bench had to consider “whether for the purpose of Section 54EC of IT Act, 1961, the period of investment of six months should be reckoned after the date of transfer or from the end of the month in which transfer of capital asset took place?” HELD by the Special Bench:
Sections 54E, 54EA, 54EB & 54EC require the investment to be made “within a period of six months after the date of such transfer”. The subtle question is that whether the word “month” refers in this section a period of 30 days or it refers to the month only. The term ‘month’ is not defined in the Income-tax Act. Therefore, its meaning has to be understood as per the General Clauses Act, 1897 which defines the word “month” to mean a month reckoned according to the British calendar. In Munnalal Shri Kishan Mainpuri 167 ITR 415 (All) it was held in the context of limitation u/s 256(2) that the word ‘month’ refers to a period of 30 days and, therefore, the reference to “six months” in s. 256(2) is to “six calendar months” and not “180 days”. On some occasions, the Legislature had not used the term “Month” but has used the number of days to prescribe a specific period. For example, the First Proviso to s. 254(2A) provides that the Tribunal may pass an order granting stay but for a period not exceeding 180 days. This is an important distinction made in the statute while subscribing the limitation/ period. This distinction thus resolves the present controversy by itself.